UPS and Teamsters agree on an employment contract, potentially avoiding a crippling strike

Philly CNN –

UPS and the Teamsters have reached a tentative agreement on a new contract, potentially avoiding a strike. A work stoppage could have started as early as next week, crippling US supply chains and causing billions of dollars in damage to the economy.

“We changed the game and fought day and night to ensure our members win an agreement that pays high wages, rewards their work and requires not a single concession,” Teamsters President Sean O’Brien said in a statement. “This treaty sets a new standard in the labor movement and raises the bar for all workers.”

The deal comes as the American labor movement has gained increasing momentum and power. The pandemic caused wages for lower- and middle-class workers in the US to rise for the first time in decades, but contract workers missed out on much of those gains. That’s why recently unionized actors, writers, nurses and teachers have gone on strike, and UPS workers and autoworkers have threatened walkouts.

“Together, we have achieved a win-win-win agreement on issues that are important to the leadership of Teamsters, our people, and UPS and our customers,” UPS CEO Carol Tomé said in the statement. “This agreement continues to reward UPS full-time and part-time employees with industry-leading wages and benefits while maintaining the flexibility we need to remain competitive, serve our customers, and keep our business strong.”

Brynn Anderson/AP

A UPS truck drives past as Teamsters President Sean O’Brien (left) and union members attended a rally in Atlanta on Friday.

The tentative agreement still needs to be ratified by about 340,000 Teamsters at UPS to completely end the threat of a strike. This ratification process will take a little over three weeks. A no by the members could still trigger a strike, but that strike would now take place at the end of August rather than the original date of August 1st.

“It’s very hopeful,” Ryan Boyd, a part-time UPS employee, said Tuesday at a Teamsters union hall in Philadelphia. “I think if the tentative agreement is consistent with the terms that the Teamsters have laid out over the past few months, then I think this will truly be a historic agreement that will benefit not only UPS employees, but workers in the industry and workers in general.”

UPS handled an average of 20.8 million packages a day last year, and while there is some excess capacity at FedEx, the US Postal Service and Amazon’s own delivery service, few thought that if there were a strike, all packages could be handled through these alternatives.

President Joe Biden welcomed the tentative deal. “This agreement is a testament to the power of employers and workers to come together to resolve their differences around the negotiating table in ways that help businesses thrive and help workers secure wages and benefits that enable them to raise families and retire with dignity and respect,” he said in a statement.

Acting Secretary of Labor Julie Su told CNN Tuesday that the Biden administration has not interfered or participated in labor negotiations between UPS and the Teamsters.

“No, the parties make this agreement themselves — and I think that’s an important thing,” Su told CNN’s Boris Sanchez in an interview from the White House.

Issues in the contract negotiations included air conditioning for delivery trucks, calls for significantly higher wages, especially for part-time workers, and closing the pay gap between two different classes of UPS workers.

According to O’Brien, the two sides had previously reached an agreement on about 95% of the contract, but talks collapsed on July 5 over economic issues. Tuesday’s talks focused on pay and benefits for part-time workers, who make up more than half of the Teamsters at the company. When talks resumed on Tuesday morning, both sides quickly reached a tentative agreement.

Many details of the preliminary agreement are not yet public. However, the union said existing full-time and part-time UPS Teamsters will be paid $2.75 more per hour and $7.50 more per hour in 2023, or more than $15,000 per year over the contract term.

Existing part-time workers, who the union said were earning as little as $15.50 an hour as starting wages in some parts of the country, will be immediately raised to as much as $21 an hour, and starting wages would be increased to $23 an hour over the life of the contract.

The company said that even before this deal, part-time workers were making more than $20 an hour on average, and that their benefits included many that part-time workers didn’t get at most other companies, including premium-free health insurance, pension and tuition reimbursement.

The company risked losing long-term customers with even a short strike, as many large shippers may have entered into long-term contracts with UPS competitors like FedEx to keep their packages in transit. Satish Jindel, president of ShipMatrix, a software provider that works with parcel shippers, had estimated that UPS might only get back 70% of its normal business in the event of a strike.

But the threat of strikes is not over yet. There is still resentment among many Teamsters, and despite the pay rises and other victories at the negotiating table, members could vote against this deal.

“The company saw profits jump during the pandemic due to the work of its members, many of whom worked mandatory overtime,” said Todd Vachon, professor of labor studies at Rutgers University. “There is a lot of frustration and I’m not sure they will ratify a treaty in the first round, no matter what it says.”

Some members will be relieved not to have to go on strike. UPS hasn’t gone on strike since 1997, so most of the 340,000 UPS teamsters have never been on strike during their tenure with the company.

Carl Morton, a UPS driver, said he was excited at the news of the deal and ready to go on strike if it came, but he hoped it didn’t.

“It’s like an instant relief,” he told CNN at the union hall in Philadelphia. “It’s crazy. Um, just a few minutes ago we thought he was going on strike and now it’s basically all settled.”

Nonetheless, there have been numerous examples of these ratification votes failing, even though the union leadership had approved the agreement.

One of those votes took place this week when 57% of FedEx’s pilots’ union voted against an interim wage agreement that would have increased their salaries by 30%. Due to the labor law that applies to flight pilots, this union is not allowed to go on strike in the foreseeable future, despite the no vote.

However, these restrictions do not apply to the Teamsters at UPS. And they have not applied to other unions where rank-and-file members have gone on strike, even though the union leadership had approved lucrative deals.

Members of the United Auto Workers union at agricultural machinery manufacturer John Deere rejected a deal and went on strike in October 2021. And many of the freight rail unions have rejected deals their union leaders negotiated last year, even though the same restrictions placed on FedEx pilots prevented them from going on strike.

In 2018, a majority of Teamsters voted against ratifying the current contract with UPS, which introduced the two-tier pay scale. However, since a majority of the union did not participate in the ratification vote, the treaty was forced on them anyway, which angered members. The Teamsters have since changed the rule, and a “no” in the ratification process would now result in a strike no matter how many participants took part.

O’Brien made his opposition to this treaty the main theme of his campaign. O’Brien told CNN earlier this year that he was confident a preliminary union agreement would be ratified. However, he said members are furious with UPS, particularly because a number of other companies, including non-union FedEx, have increased wages for workers during the pandemic.

“There’s a lot of animosity and anger, not just during the last contract but also during the pandemic,” O’Brien told CNN in June. “They weren’t rewarded as UPS made record profits.”

Spurred by the surge in online shopping during the pandemic, UPS posted profits of $11.3 billion in 2022, nearly doubling to repeat records during the current five-year deal.

The Teamsters said the deal will cost UPS about $30 billion in additional expenses over the five-year contract period. UPS declined to comment on that estimate, but said it would detail its own estimate of costs when it reports second-quarter results on Aug. 8.

UPS shares fell 1.5% in afternoon trade.